German business sentiment deteriorates in December - Ifo

17th Dec 2025 10:16

(Sharecast News) - German business sentiment unexpectedly deteriorated in December, according to a survey released on Wednesday by the Ifo Institute.

The business climate index fell to 87.6 from 88.0 in November, missing expectations for a reading of 88.2.

The current situation index was unchanged in December at 85.6, while the expectations index dipped to 89.7 from 90.5.

The manufacturing index fell to -14.8 in December from -13.8 the month before, while the gauge for the service sector was -2.1, down from 0.6. The index for trade declined to -24.6 from -22.6, while the gauge for construction came in unchanged at -15.2.

Ifo Institute president Clemens Fuest said: "Sentiment among companies in Germany has deteriorated once again.

"Companies are more pessimistic about the first half of 2026, while their assessment of the current situation remained unchanged. The year is ending without any sense of optimism."

Carsten Brzeski, global head of macro at ING, said: "All in all, following the principle of 'prepare for the worst and hope for the best', today's Ifo index reading doesn't come as a surprise. To the contrary, it fits into our base case scenario that the German economy will end the year with yet another growthless quarter.

"However, there is sufficient evidence to suggest that the German economy will leave stagnation behind next year, even though any cyclical rebound should definitely not be mistaken for a structural improvement."